Need some 401k advice

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I don't blame your apprehension, especially sice ASHDUMP pointed out you're a frequent NES'er.
Social security, pensions, 401k etc. all seem to be in the same beg,borrow,rape, from the now to feed yesterday. They suck money away with a monopolistic attitude only to keep saying "oh don't worry about your hard earned money. We know whats best for your pre conceived irrisponabilities. We'll take care of you". Yeah well I'm not relying on any of it.
Everyone's personal circumstances are different you should have more options. You should have personal choices. If you wanted to invest your $ in silver coins you shoud be able to. I agree with you. I'd be bent if I was automatically enrolled in a 401k. Especially if I couldn't access it for pre determined period. Not to mention, however it's invested in the account fluctuates with the market. Ive worked with old timers that worked an extra 3-4 years cause the market took a hit in 09 and they lost value in their 401k's.
 

JoeT

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ok, I lied....I'm going to end with this

There are two groups of people that need a financial adviser the most. The guy with some money that is looking to max his retirement and the guy who's young and has "nothing"

Investing smart now will insure that you're not playing catch up at 55. Find a "guy," a professional that can guide you in the right direction
 
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2 years is probably when he's vested, not when they start matching, but he should check on that.
Oh, I was wondering about that. So, it could be they start matching NOW but it won't be vested for 2 years. HKDrummer should check up on that, and if that's correct I'd increase my recommendation to contribute now instead of wait. Still, don't contribute so much that you have none left over to put aside as cash. You can always increase the % contributed later when you're ready.
 
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Oh, I was wondering about that. So, it could be they start matching NOW but it won't be vested for 2 years. HKDrummer should check up on that, and if that's correct I'd increase my recommendation to contribute now instead of wait. Still, don't contribute so much that you have none left over to put aside as cash. You can always increase the % contributed later when you're ready.
Someone told me today they only contribute something like 5% or something. I don't know how much of that is true however. I'm waiting to get the contact information of the guy who actually handles it.
 

CosmicIrony

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The usual deal is that company matches what you contribute, up to a percentage of your pay. If it's 5%, that's pretty awesome.
Your 401K shouldn't be your only savings, but it's an excellent way to save for retirement. What else will you have to live on when you can no longer work?
 
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Someone told me today they only contribute something like 5% or something. I don't know how much of that is true however. I'm waiting to get the contact information of the guy who actually handles it.
They probably meant they'll match your contribution, up to a total of 5% of your income. You'll also want to ask them what the matching percent is. 100% matching is best, but my company only matches 50% of what I might contribute.

- - - Updated - - -

The usual deal is that company matches what you contribute, up to a percentage of your pay. If it's 5%, that's pretty awesome.
Your 401K shouldn't be your only savings, but it's an excellent way to save for retirement. What else will you have to live on when you can no longer work?
It's not the only option. I kind of like the tool shed in the woods approach. This may not be the preference of HKDrummer though.
 

jpm

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if you're going to 'invest' in tangible goods for fear of an economic collapse scenario where traditional money will be apparently worthless, you should buy something more useful than pretty metal with no practical uses in a worst case scenario. What good is gold or silver going to do anyone who is hungry, thirsty, sick, injured, cold, low on ammo, etc.? Think about why anyone would want to trade you food, water, medicine, ammo, fuel, clothing, booze for something that's just shiney. I certainly wouldn't.
 

M1911

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Someone told me today they only contribute something like 5% or something. I don't know how much of that is true however. I'm waiting to get the contact information of the guy who actually handles it.
Only? Only?

That is free money that you are throwing in a garbage can. Typically it is a match. For every 1% you put in, they match it with another 1%(or 1/2%) up to 5%. By not contributing whatever is the maximum amount they will match, you are saying "no I don't want your free money."

You need to educate yourself about your 401k plan. They will have some documents about it. They probably gave you a copy when you joined the company, but if you don't have that the HR department can get you another copy.

If you are 32 and are just starting to save now, frankly you are already way behind. Compound interest will work for you, but only if you start saving now. A relative recently passed away in her '80s. When she was in her early 20s, she worked as a secretary for GE. She stopped working a few years later when she got married. She had been living with her parents while she was working, so she saved pretty much all of her pay, though it wasn't much. She put it in diversified stock funds and never touched it. 50 years later her savings was worth over $1M.
 
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if you're going to 'invest' in tangible goods for fear of an economic collapse scenario where traditional money will be apparently worthless, you should buy something more useful than pretty metal with no practical uses in a worst case scenario. What good is gold or silver going to do anyone who is hungry, thirsty, sick, injured, cold, low on ammo, etc.? Think about why anyone would want to trade you food, water, medicine, ammo, fuel, clothing, booze for something that's just shiney. I certainly wouldn't.
Well, the scenario of everything fully collapsing, no more economy to the point where people don't even care about gold anymore, and forever... is unlikely. People would quickly work to rebuild and then care about PM's again in a short amount of time.

But yeah, he shouldn't focus too much on buying silver now when other aspects of saving are more important.
 

dhuze

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Someone told me today they only contribute something like 5% or something................
5% is 2 % more than I get. I'd be on that like flies on dog shit. If you don't want to put money in, at least put in whatever they match up to. If it's 5%, put in 5% that's you doubling your money every two weeks. No better guaranteed investment exists.
 
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I'm 33. When I went to a financial planner they said I'd need about 4.5 million to retire and live at today's spending in today's dollars. That was before I had a kid and I don't think the wife was factored into that calculation. Now they were a ton of assumptions on their end, but you can use that as a fairly good measure of what you might need to get to. Worse case, you overshoot and have extra money when you retire.

Let's say you decided to start stuffing money in your mattress instead of whatever other investing you could do. To get to 4.5 million and retire at 70, you'll need to start saving ~118,000 a year.

As others have said, compounding interest is your friend. The sooner you start, the longer you money has to grow, and the more you'll have in your later years (in theory).

The best advice anyone gave me was when I first started my first real job (not McDonald's). Guy said enroll in the 401K right away so you never get used to missing the money. Best thing I ever did. I'm not in the millions yet, but have a good base for the money to grow for 30 years.

Seriously, if you don't know what compounding interest is, look it up (not trying to talk down to you or anything).
 

yogi

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I keep reading the term "compound interest". Stocks are NOT compound interest. Putting more money into stocks does guarantee an increased return. Interest rates today, thanks to .Gov, are basically zero. And in some other countries negative. You are 32, save money multiple ways, invest in the 401k and get the employer match, don't pay to carry credit card debt and plan out your goals and what they will cost. And never invest in any one thing all at once, buy over time (dollar cost average). Good luck!
 
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Yeah I tell everyone my age (in the 20s) this is the most important savings decade because it builds habits and starts the interest accruing. Honestly OP, the same thing happened to me when I was in my teens at a summer job. Auto enrollment in a plan. The difference is I was 18 and knew it because I read the darn paper that disclosed it. Not everyone has money to max every year but I am 5 years younger and have save over 8k a year for retirement. Also don't avoid learning about index funds and basic economics, it's an essential skill in building wealth and being an informed citizen whether you choose to invest or no.
 

40 caliber

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I have contributed to my 401k for the last 20 years. it is the largest single asset I have. I am also no financial genius, I have made every mistake possible.

if you don't want to save, that is your call but it has so worked for me!!
 

jasons

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Kinda hard to lose with a matching 401k, at least up to the match. Lots of people would love a 5% match...
 
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- How is it my company can legal enroll me in a 401k without having me sign anything and/or have me fill out beneficiary paperwork
Auto enrollment is legit, it's done to keep the plan from becoming "top heavy" ("top heavy" is when only a few, usually highly compensated employees contribute to the plan, and the bulk of the workforce does not).

It also encourages the lazy and uneducated to enroll when they would otherwise ignore the plan (hint, hint)...


- Is it even worth having considering I have no company matching and it's $800 a year? After 30 years I should end up with a whopping 24k plus interest....nothing to right home about.
YES!!!

As everyone has already told you, you're a fool if you're not contributing at least 10% of your income to some sort of retirement plan, and tax deferred plans like a 401k are one of the best way to go (especially if you'll eventually get a match).

- If I decided I wanted to opt out and take my money elsewhere, am I basically screwed and lose that $800?
You'll have to pay regular taxes (because you haven't been taxed on that money yet) plus a 10% penalty for withdrawing that money, unless you qualify for an exemption. You might be able to roll it over to an IRA, depending on the plan rules and your tax status.

Personally for me I don't like 401k's. Perhaps it is just because am uneducated on them, but for me I like having tangible goods or investments.
Get educated. Ignorance is no excuse for not properly planning for your future, and I don't want my tax dollars paying to subsidize your retirement in some state run old folks home just because at 32 years old you were too stupid to figure out your 401k.

I would rather tak that 34 bucks every two weeks and buy silver coin. I don't know if that would be the wisest investment, but if things crash, I still have my silver.
Lets be honest, even if that was a sound investment strategy, are you disciplined enough to actually stick to it, every two weeks for the next 30 years? Probably not.

Besides, there's a difference between investing in precious metals and hoarding silver coins under your mattress. The former can be a good investment, if done in scale, timed correctly and part of an overall investment strategy. But you need to be well informed, which you're clearly not. The latter is what tin foil hat preppers holed up in the mountains do, and it doesn't work because the marginal transaction cost is too high, it's not secured, and it's not diversified.

And you clearly misunderstand the potential of precious metals as an investment. It's not a safe, loss proof investment. Do you have any idea what PM prices have done in the last 4 years? It's also not a medium of exchange, and very difficult to sell without getting hosed.

Once you educate yourself, you'll learn that within a 401k you have a lot of investment choices. Even more if you choose to go with an IRA. You can choose to put your money in stocks, bonds, funds that represent different types of investments (PMs, real estate, etc), even cash. A 401k is just the account structure, not the investment itself. You can make your 401k as safe or risky as you want.

But the biggest risk is not having one at all.
 

NorthShore

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There is some solid advice on this thread. Definitely contribute to your 401K regardless if you feel the world is going end. Juice up your contribution so it makes sense to you and read about it. Once you get going you won't miss the money from your check as you will have a new baseline for your budget/expenses.

If you like gold and silver then buy some occasionally so if the world does end you have something tangible. I like assests I can touch and see at my leisure but you can't ignore the benefits of tax free money and compound interest. I started my 401k at your age and it's working out well for me. If I get jammed up in a financial emergency I know I can borrow against it.

Just dont pick one approach to your financial future - Diversify!
 

swampy

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Your 401k provider should have advisors to guide you. Many plans have target funds for investors that don't feel comfortable picking their own funds. Those funds are designed to get a maximized strategy for the target year that you will likely retire at. The time to invest in gold and silver is when prices are down. The only metal trading that should go on right now is short term trading on up and down swings which isn't a game for someone not doing it every day. Stockpiling bullion and coins is a side bet to soften the blow of a bad economy. It isn't a retirement plan unless you own and operate a mining claim. I am stockpiling reloading components so I won't have to buy as many of them in retirement. Brass, pewter, linotype, and lead are my precious metals

A young man such as yourself should be invested in equity funds with an aggressive focus on growth. As you get older you shift little by little to safer investments to protect the gains that you've made. The market goes up and down. You have to fight the urge to panic during down markets and also to avoid getting greedy during good markets. When share prices drop your weekly investment buys more shares of the funds you are investing in. Time is working with you when you are young and it slowly shifts to work against you as you age. Some of the funds in my 401k are returning 20 to 40% a year. I hope it continues for the next 12 or so years until I retire.
 

JJ4

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I really get the "I need every penny now" mentality, but over the long run it will leave you in trouble.

I'd spend awhile reading up all you can. This is a good place to start: http://www.bogleheads.org/wiki/Main_Page

1) Contribute to employer plan up to maximum match
2) Contribute to Roth IRA if tax rate is low, otherwise
3) Traditional IRA or maximize employer 401k plan

Asset allocation, as someone mentioned, you want LOW FEES. Even small fees and expenses compound over time and work against you.
Here's a good place to start: http://www.bogleheads.org/wiki/Lazy_portfolios
 
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What about theft, fire, terrorist acts or natural disasters...depending on where & how you store assets (not really asking where you keep your stuff). Just make sure your homeowners insurance or renters insurance provide adequate coverage. You might be surprised. There are real examples I've seen that have been bad for folks.
^ this

tonydedo is spot on - sorta harsh, but tough love is tough

you "invested" $26K on stuff, so you have some flow. it's time to check your assumptions, make a plan and diversify.

financial education is not fun or sexy, but it beats feeding your kids MREs and living in a cave if the s doesn't htf.

tabascoisnice would be an excellent person to get you started - pm him
 
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Your 401k provider should have advisors to guide you. Many plans have target funds for investors that don't feel comfortable picking their own funds. Those funds are designed to get a maximized strategy for the target year that you will likely retire at.
This is the type of fund you should look for. I have no real desire to spend hours studying funds so I use one of these. My 401K is at Fidelity and they have funds that are based on your expected year of retirement. When the date is far away your money is invested aggressively. As you get closer to retirement the investment mix gets more conservative. Couldn't be easier.
 

In God We Trust

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What about the idea of investing it in tangible goods such as gold or silver coin.

as for not having a 401k, for the last 12 years of my adult life I have needed every extra penny to pay for things like food, heat, and fixing up my old ass house. Retirement has been the least of my concerns.
I say keep it and keep dumping the $800 a year in if it's all you can afford. You didn't miss it right? Gold and silver should also be part of your portfolio, but not the entire thing. Buy a couple coins here and there when you can and sock them away. As you get raises, add a little more to your 401K. Like M1911 said, do the SP500 index fund. I guarantee you they have one, because it is one of the most popular funds.

Think of it as an insurance policy also. I know how hard it is to save when you are barely getting by, but if you ever lost your job or got really ill and couldn't work anymore, you can always cash out the 401K, eat the tax hit and have a few grand to get you by until you get back on your feet.
 
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Index funds and target date funds (of index funds) are my best advice for investment vehicles. The whole idea is they invest the money in a index/basket of stocks and if it goes up it goes up and if it goes down it does but you aren't paying an investment manager lots to scratch his head and shrug. I once read an article where Warren Buffett basically said if you don't have the time and knowledge to go all in on understanding stocks then buy a whole market US index fund, keep adding to it, and never look at anything but what you are paying in expenses. I have read a lot on investing and enjoy it but the fund in my ira is the same target date index fund as my fiance got defaulted into when she was enrolled at work. Why, because it's simple, cheaply administered, and it will diversify each year to rebalance. My first year I think it had 500+ in growth alone.

Also if you are ultra nervous about needing money before retiring. Roth IRA and max that contributing out. You can take out dollars you put in just not the earnings before a certain age. This is where I had my fiance start when she was 24 and worked hourly unpredictable jobs. And she has a bunch saved within a year. So it's like a piggy bank for a worst case no other options flooding rainy day.
 
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My company puts 3% and I put in 5%. I've only had a 401k for about 10 years or so, and other than taking a beating a few years back, it's doing quite well for me.
 
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Auto enrollment is legit, it's done to keep the plan from becoming "top heavy" ("top heavy" is when only a few, usually highly compensated employees contribute to the plan, and the bulk of the workforce does not).

It also encourages the lazy and uneducated to enroll when they would otherwise ignore the plan (hint, hint)...




YES!!!

As everyone has already told you, you're a fool if you're not contributing at least 10% of your income to some sort of retirement plan, and tax deferred plans like a 401k are one of the best way to go (especially if you'll eventually get a match).



You'll have to pay regular taxes (because you haven't been taxed on that money yet) plus a 10% penalty for withdrawing that money, unless you qualify for an exemption. You might be able to roll it over to an IRA, depending on the plan rules and your tax status.



Get educated. Ignorance is no excuse for not properly planning for your future, and I don't want my tax dollars paying to subsidize your retirement in some state run old folks home just because at 32 years old you were too stupid to figure out your 401k.



Lets be honest, even if that was a sound investment strategy, are you disciplined enough to actually stick to it, every two weeks for the next 30 years? Probably not.

Besides, there's a difference between investing in precious metals and hoarding silver coins under your mattress. The former can be a good investment, if done in scale, timed correctly and part of an overall investment strategy. But you need to be well informed, which you're clearly not. The latter is what tin foil hat preppers holed up in the mountains do, and it doesn't work because the marginal transaction cost is too high, it's not secured, and it's not diversified.

And you clearly misunderstand the potential of precious metals as an investment. It's not a safe, loss proof investment. Do you have any idea what PM prices have done in the last 4 years? It's also not a medium of exchange, and very difficult to sell without getting hosed.

Once you educate yourself, you'll learn that within a 401k you have a lot of investment choices. Even more if you choose to go with an IRA. You can choose to put your money in stocks, bonds, funds that represent different types of investments (PMs, real estate, etc), even cash. A 401k is just the account structure, not the investment itself. You can make your 401k as safe or risky as you want.

But the biggest risk is not having one at all.
QFTMFT.
 

Varmint

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This is the type of fund you should look for. I have no real desire to spend hours studying funds so I use one of these. My 401K is at Fidelity and they have funds that are based on your expected year of retirement. When the date is far away your money is invested aggressively. As you get closer to retirement the investment mix gets more conservative. Couldn't be easier.
A warning about this - what these funds think are "conservative" investments are bond funds - which are on a 20+ year run thanks to unsustainable global central bank policy - they are not safe at all.

the only thing safe in a 401k fund is a money market, which is probably where your $36/paycheck is going by default. I'd leave it there - the last thing you want is to start investing in a 401k and see it drop 70%, that might discourage you from investing.
 

rep308

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What about the idea of investing it in tangible goods such as gold or silver coin.

as for not having a 401k, for the last 12 years of my adult life I have needed every extra penny to pay for things like food, heat, and fixing up my old ass house. Retirement has been the least of my concerns.
Where is that "not sure if serious" graphic? Dear Sir please get yourself some sort of financial education or develop a taste for trailer living and dog food. I'm betting no life insurance or will either, correct?

When you say 'no matching for 2 more years' do you mean vesting? The first 5 years I was matched, but it wasn't mine, because I had not put in enough time to vest. After 5 years I got the matching for the previous years. Check the details.
 
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